How to Find the Right Partner for Big Bucks Contract

Karen Barbour is founder and president of the Barbour Group, a $3.6 million dollar company that grew 45% from 2007 to 2010, earning a place -- for the 4th consecutive year -- on Inc.500/5000 list of the nation’s fastest-growing private companies. She was also a 2009 Ernst & Young Entrepreneurial Winning Woman.

She is outspoken in her belief that small business owners need to be savvy when competing or doing business with the big boys … especially in construction, which is where the most lucrative government contracts are found.

Barbour is blunt and “shouts out loud,” as she puts it, about the ways in which government regulations hamper small businesses and leave them vulnerable to predatory partners. A new American Express OPEN survey has documented for the first time, the degree to which small businesses are used by larger companies to get a contract and then are locked out of the actual performance of the contract. “Nearly one-third (29%) of active small business contractors have been ‘stiffed’ by large prime contractors,” according to the survey. Further, the likelihood of this happening increases over time.

It’s that shouting out loud part I like. If women-owned businesses are going to grow, women must take a stand, mentor others, and demand change. Barbour does all of the above. She testifies before Congress, heads up local government commissions that support small businesses, and mentors others, particularly women-owned construction businesses.

The Barbour Group provides surety bonds nationwide for construction companies bidding on federal contracts. Unlike other areas of federal contracting, construction bids usually have the smaller business -- the one with the small business, women- or minority-owned certificates -- as the prime contractor and the big guy is the sub.

It’s kind of a tail wagging the dog situation. But the tactics used are useful to any business looking to partner up with somebody bigger than they are.

In effect, the smaller business gives the team a bidding edge but is responsible for everyone’s performance, including the much bigger subcontractor. “You can lose your house over it,” Barbour says. But, oh, the rewards are sweet if you can make the right match: Projects that are profitable and something to be proud of.

While construction companies are a small percentage of federal small business contractors, they’re the ones making the most money, she says. Every government agency has a construction budget. Getting a place at that table means big bucks.

Women-owned businesses are a growing part of the construction sector but are not prepared for either the benefits or risks of government contracting, a deficit Barbour works to rectify. “With female contractors, I feel like Tinkerbell, saying come fly with me,” she says.

The big guys, according to Barbour, can and often do undermine their smaller partners who have the set-asides. While all partnership require careful preparation, the small-business-as-prime situation requires extra caution. It’s critical to build a team with a trustworthy, reliable subcontractor. “Make sure your teaming partner has a great reputation and has demonstrated a solid record of teaming with minority- and women-owned businesses in the federal arena.”

Barbour stresses that these good teammates can choose from many primes. If they choose your company, you have someone who will support you and bring you the management and mentoring you need. Don’t choose blindly. Lay the groundwork.

Make yourself look good. “It’s like mating. You have to have all the pretty feathers,” she says. Dress up the corporation with professional marketing materials.

Build your reputation. Join trade associations, get references, do small contracts on your own, on time and on budget.

Talk to the small business directors of the government agencies you want to work with. Ask them which big companies they recommend as good teaming partners for small businesses.

Network and market. Introduce yourself to the recommended subcontractors, build relationships, and show them why you are the best choice for a prime, from certificates to in-place bonding to jobs already done.

“The more education and experience you have, the more impressive you will be,” she says. “The less hand-holding [the subcontractors] think they have to do, the more likely they are to choose you.”

1) Contractually guaranteed work share
2) Co-marketing opportunities
3) Opportunities where what you provide fills a gap, rather than serves as a staff augmentation

I have found that the earlier in the capture process you can insert yourself, the bigger your seat at the table is, and the more workshare you get. After all, if the proposal includes key personnel and one of the resumes is from your company, it's going to be hard to explain to the contracting officer why there's a bait and switch after the award is made.

With that said, every prime is going to tell you how great they are at working with small businesses. We also found that bringing a kill to a partner helped solidify the relationship.

Still, the best way to create that critical partner mental positioning is to provide something that nobody else can provide and to position it as a strategic advantage.